I bought a 95 f350 crewcab w/7.3 powerstroke.  The water in fuel light came
on quite often since I got it about 5 weeks ago.  When I opened the valve to
let the water out usually nothing happened. Sometimes a little fuel would
come out but I had to rev the engine to clear the water.  Today I noticed
fuel leaking underneath.  It is puddling on top of the engine and running
down and dripping off the bottom of the bellhousing.  I thought perhaps one
of the fuel lines conneted to the fuel filter may have been leaking, so I
picked up a new filter and gasket and pulled the filter canister out.  The
hose on the bottom was wet and but I couldnt find a leak in it.  I replaced
it anyway.  I pulled the valve assembly off and cleaned it up but that didnt
appear to be leaking either.  The assembly that bolts onto the right side
(return I think) had a lot of dark sludge plugging the strainer ... I cleand
the strainer off before I reassembled it but nothing seemed to be leaking at
the connection to the filter canister.

I put everything together and it seems to be leaking worse.  I dont think
any connetions to the canister are leaking.  The guy I bought it from said
he replaced the injection pump recently.  He said that he services a fleet
of f350 ambulances and is very knowledgable about the 7.3. There was nothing
wrong with the injection pump but he did it as a PM.
The pool of fuel seems to be largest directly under the injection
pump.....Do they leak when they go bad?  The engine still runs strong
without any hesitation.

Any Ideas where to go from here would be appreciated.

???????????